Companies using technology to make rapid cash offers to home sellers are typically paying their customers close to market value, a new study found.
The study’s conclusion is likely to be reassuring for sellers who are considering using so-called iBuyers instead of traditional real-estate agents. But it raises questions about the long-term sustainability of the iBuying business.
Companies like Opendoor and Zillow Group Inc. give consumers cash for their homes, saving them the hassle of tidying up before open houses and the risk of being unable to find a seller. In turn, consumers pay a fee of about 6% or more—higher than they typically would pay a traditional real-estate agent.
Many sellers have wondered if the iBuyers are making a lowball offer for their homes in exchange for faster execution.
The new study from Mike DelPrete, a scholar in residence on real-estate technology at the University of Colorado at Boulder, found Opendoor and Zillow typically purchase homes for just over 1%, or around $3,800, less than the value of the home as determined by First American Financial Corp. , a real estate title insurance company.
“This has always been a fundamental question. Are they ripping people off or not?” Mr. DelPrete said. “You can say pretty conclusively iBuyers are making fair offers on the homes they buy.”